On Sept. 6, President Obama announced that his Administration will seek new funding for highway, rail and airport projects in an effort to spur job growth and address the long-term needs of the transportation system. Obama said that he will ask Congress to approve $50 billion for transportation infrastructure as an initial step. The President said he will support a six-year initiative to address the nation’s long-term needs. Among the goals are the rebuilding of 150,000 miles of roads, construction and maintenance of 4,000 miles of rail, and rehabilitation or reconstruction of 150 miles of runways.
Obama also indicated a commitment to passage of a reformed and expanded long-term surface transportation bill, which has been stalled in Congress since October 2009 due to a lack of funding. A White House fact sheet indicated that additional revenues would be provided through a mix of General Fund money and a new Infrastructure Bank that would “leverage private and state and local capital to invest in projects that are most critical to our economic progress.”
The American Trucking Associations (ATA) is pleased that the Obama Administration has recognized the economic benefits of transportation investments and has agreed to support an immediate boost in funding for critical needs. Our nation will also greatly benefit from a comprehensive, multi-year transportation investment approach focused on creating jobs and improving supply chain efficiency. While fully addressing the nation’s most critical transportation needs will be costly, we believe that the public is willing to support cost-effective projects that improve safety and mobility. ATA looks forward to reviewing the details of this proposal and working with President Obama and Congress to enact a comprehensive, financially sustainable transportation plan.
The President also announced on Sept. 8 a proposal to allow businesses to expense – write off currently for tax purposes rather than depreciate over time – their investments from now until the end of calendar 2011. Most capital investments, except those in real estate, would be eligible for this treatment. This change in the law would allow the investing company to offset its taxes with the write-off, giving it more cash now.
The up-front expensing is in lieu of the ordinary depreciation over a span of years, so the government loses taxes in the first year, but it will gradually recoup much of this since the depreciation that would otherwise be taken is not. While few details are available, the White House has stated that of the presumed $200 billion tax break from the expensing, $170 billion would be recovered in this fashion, so only $30 billion would be subject to pay-go. The program would only last through 2011, so it might change the timing of some expenditures, like the housing and auto credits did, but have very little overall effect. ATA is very interested in viewing the details of the expensing proposal.
As proposed, the expensing provision would be effective as of September 8, 2010. However, no changes will occur until Congress approves it and there is much speculation whether it will do so this month, after the election, or next year – if at all.
Source: American Trucking Association